How to Build a Share Certificate Ladder

October 18, 2023

Opening share certificates can be a smart way to put your savings to work, offering higher dividend rates than many traditional savings accounts. But be mindful of their limitations, particularly when it comes to accessing your cash.

To address these limitations, it’s important to have a strategy — like a share certificate ladder — in place. A share certificate ladder can help you guard against risk while taking full advantage of share certificates’ benefits.

What Is a Share Certificate Ladder?

Share certificates are to a credit union what certificates of deposit (CDs) are to a bank. CDs and share certificates are insured savings accounts. CDs earn interest, while share certificates earn dividends — over a specified time period. When the term ends and the certificate matures, you can withdraw the balance or renew the certificate.

Share certificates typically have higher dividend rates than traditional savings accounts, but these higher returns come with time restrictions: You can’t touch the money in your certificate until it hits maturity. If you do end up needing to withdraw your cash before then, you’ll end up paying early withdrawal penalties.

That’s where a share certificate ladder comes in. “Laddering” your certificates is a strategy to help you reap the benefits of higher dividend earnings while maintaining access to a portion of your deposits at regular intervals. You do so by opening several share certificates with staggered maturity dates — each representing a “rung” on the ladder — giving you access to a portion of your savings on a consistent basis.

How To Build a Share Certificate Ladder

A share certificate ladder may sound complex, but it’s easy to build one. Here’s how to do it: 

1. Open multiple certificates at once — each with a different maturity date. Stagger the maturity dates at consistent intervals based on how often you want access to your funds. For example, you could build a three-rung ladder with a maturity every year by opening one, two and three-year certificates.

2. Fund the certificates with savings you won’t miss. Once you make a deposit into a share certificate, you can’t touch it without penalty until that certificate matures. So be sure to only deposit money you can afford to set aside. You can fund each certificate equally or allocate your funds based on the different certificates’ dividend rates. For instance, if the three-year certificate’s dividend rate is higher than the one-year certificate, you may want to put more money into the three-year certificate.

3. As your certificates mature, decide whether to withdraw the funds or reinvest them. If an expense pops up and you need some extra cash, you can withdraw a certificate’s funds as soon as it matures. Or you can continue the ladder by reinvesting the money into a new certificate. Continuing to reinvest your balances will ensure you have revolving access to a portion of your savings as it grows over the years.

Share Certificate Ladder Example

Say you want to build a share certificate ladder with three certificates. You open a one- two- and three-year certificate.

Here’s how a laddering strategy could look like over four years if you decided to reinvest your earnings in new three-year certificates upon maturity:


Year 1

Year 2

Year 3

Year 4

Buy one- two- and three-year certificates

One-year certificate matures, reinvest the funds in a three-year certificate

Two-year certificate matures; reinvest the funds in a three-year certificate

Three-year certificate matures; reinvest the funds in a three-year certificate

Three-year certificate matures; reinvest the funds in a three-year certificate

If you continue this pattern, a new three-year certificate will mature each year.

Pros and Cons of a Share Certificate Ladder

Keep the following in mind if you’re thinking about building a certificate ladder:


  • A certificate ladder allows you to take advantage of the highest dividend rates. Share certificates with longer terms usually offer higher dividend rates. A ladder allows you to cash in on those high rates without locking up your funds for the long term.
  • A certificate ladder ensures you’ll have access to a portion of your deposits on a regular, consistent basis. You can space out your certificates’ maturities on a timeline that works for you — whether that’s every three months or every two years.
  • You can adjust your strategy as each certificate matures. For example, if short-term certificate shares happen to have higher dividend rates, you can reinvest for the short term and take advantage of those higher rates. Alternatively, if you need the cash, you can withdraw your balance when a certificate matures.
  • When opened at an insured institution, share certificates are federally insured — typically up to $250,000 per depositor per ownership category.


  • Building a share certificate ladder requires keeping track of multiple maturity dates. Every time a certificate matures, you must decide if you should reinvest your money and how to do it.
  • A share certificate ladder needs consistent attention. A certificate ladder can be a long-term strategy, but it’s not something you can “set and forget.”
  • You could miss out on bigger returns by relying too much on certificates. Depending on current interest rates, certificates may offer less competitive returns than higher-earning securities, like stocks.

Should You Build a Share Ladder?

Whether or not you should build a share certificate ladder depends on your financial situation and savings goals. Keep in mind that while a certificate ladder is generally a higher-earning savings account, it’s risky to lock up all your savings in certificates. It’s important to have some savings on hand that you can access at any time, and a traditional savings account is a better choice for the job. And when it comes to building wealth, certificate laddering isn’t a substitute for other investments that offer higher returns.


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